I'll be honest...I've been rejected and have failed plenty of times. In fact, it became so terrible at one point, I started to believe that I just wasn't cut out for business. These early set backs however have not stopped me from working hard as a financial professional and being well on my way to surpassing all of my long term financial goals in my thirties! So how does one overcome failure and manage to turn it into wealth? This is a difficult question to answer if you believe that wealth only comes from having superior talent or skills. Although having the right talent can lead to a higher income, income however, is only a part of the larger wealth equation.
I think of creating wealth as a physical activity rather than a mental one. In other words, it is something that you do rather than something you are good at. For example, if you want to be physically fit then you have to have a proper diet and exercise over a long period of time. Likewise, if you want to be financially fit then you have to save, by living below your means, and invest over a long period of time. Unless your talent is exceedingly rare and valuable, a marginally higher income will do nothing for your wealth if you are not continually saving and investing it.
To think of it another way - Warren Buffet does not receive a million dollar paycheck every week that he then deposits into his checking account. The value of his wealth rises with the value of the assets that he owns. Therein lies the key...you must own things that tend to appreciate in order to build wealth. If the majority of things that you buy tend to depreciate or lose value, there isn’t any amount of income that will be able to plug that hole. Finding assets that naturally appreciate isn’t a secret or a mystery either. These are things such as mutual funds, stocks, bonds and real estate. Don’t over think this part of it, just spread your savings around these or similar types of assets and patiently watch your financial health grow stronger over time.
Can a stock genius make me wealthy?
Can a stock genius make me wealthy?
I definitely think that there are plenty of skilled money managers out there that play a great role in protecting wealth but I'm not so sure that it makes a whole lot of economic sense to be able to pay someone to create wealth for you. If wealth were something that you could just buy like child care or a clean house then why are there so many people that still do not have it. Just as with any service, money management is subject to the laws of supply and demand with the best managers charging the highest fees which tend to cancel out any potential advantages. I think at best with the right manager and the right fee structure you could play good defense if you are already wealthy and want to focus on other things but in regards to building your own wealth only you will care enough about it to actually make it happen. Again, building wealth does not have to be about possessing some secret knowledge but rather living below your means and using time to your advantage.
Are you convinced yet? If not, I'll leave you with this final example to think about. Take John and Jane...Jane is stock market wizard that can double the market's returns year in and year out due to her special skills and love for investment research. John on the other hand knows nothing about markets but knows enough that it is smart to be invested. Since Jane is highly skilled she earns an average of 16% every year from her investments while John is only able to average 8%. Jane is very pleased with her abilities and feels the need to reward herself more often so she is only able to devote $10,000 a year to her investing. John on the other hand is less sure so he saves and invests as much as he can and thus is able to devote $20,000 a year to his investing. Who do you think has more money after ten years? You guessed it...John actually has 36% more wealth than the stock market genius. In fact, it takes over fifteen years for Jane to just catch up to John. Isn't that amazing?! You can probably count on one hand the number of people in the world that are capable of doubling the market's return over a fifteen year period. So if you want to be part of an elite group of investors you can actually get there by saving and investing more money without any need for super secret market knowledge. Do you need help figuring out how to to save more money? Here's a hint...seek less rewards and accept more challenges...also, take that new Audi back to the dealership and trade it in for a nice used Toyota.
Make saving and investing a part of your lifestyle and you’ll be giving yourself an excellent chance at becoming wealthy at some point in the future.